SAGA Successfully Drills in Orenburg, Increases Resources

SAGA Oil continues its progress in its Russian oil venture in the Orenburg region. The
positive drilling results this spring will lead to a revised reserve potential in addition
to the March acquisition of a significant new, prospective acreage in Orenburg.
The new well #107 has penetrated a previously non-confirmed part of the Tournaisian
formation. The well data has proven that the water-oil contact is 5 meters lower than
previously assumed by the 3D seismic. This is a significant discovery since a lower water oil
contact results in thicker production zone for the northern Tournaisian block. It also
confirms the total thickness of the best Tournaisian production zone to be
24 meters in the dome section.

Well #107 was originally dedicated to be the first injection well on East Shaltinsky,
but it will now be prepared for re-classification to a production well and will be put onstream
as soon as possible.

This latest discovery will also change the resource base and development plan since the
potential of the northern Tournaisian block has increased.